Italy's once powerful Northern League is in disarray after its leader Umberto Bossi and members of his inner circle resigned in the past week.

The 70-year-old leader of the powerful anti-immigrant party played a crucial role in keeping former prime minister Silvio Berlusconi's coalition in power before the billionaire leader was forced out of office in November last year.

Bossi, a charismatic but uncouth figure known for his rude gestures and use of expletives, often railed against political corruption and demanded a better deal for those in the north of Italy.

The firebrand politician ended a 30-year career last Thursday after he and his family were linked to alleged fraud, money laundering and misuse of funds by the party's former treasurer, Francesco Belsito, who quit a week ago.

At a party meeting in the northern city of Bergamo late Tuesday, he apologised for the "damage" he had done to the party and the behavior of his children.

Bossi's 23-year-old son Renzo, who was being groomed as a political successor, on Monday resigned from his position as a councillor in the Lombardy regional assembly .

"I am sorry for my children, I ruined them," Bossi said late Tuesday. "Like Berlusconi, I had to send them to study abroad, sent then away to save them. My heart is broken."

Both resignations followed an investigation by Milan prosecutors into the misuse of funds the party received from the state for electoral campaigns.

Renzo Bossi was an alleged beneficiary of a party slush fund managed by the party's former treasurer and there were claims that his education at a British university was paid for by the party and he was also given the use of party cars for personal use.

"In this moment of difficulty, and without anyone asking me to do it, I have stepped aside and resigned," Renzo Bossi told Mediaset TV. "I am calm. I know what I did and didn't do."

Belsito, the treasurer, has also been accused of directing party funds to pay for the personal expenses of the Bossi family, including travel, dinners, hotel accommodation, expensive cars and renovations to the Bossi home.

"The real scandal is not that an anti-corruption party should be caught buying degrees and cars, renovating the leader's house or investing in Tanzania, it is that they have the funds to do it," said James Walston, professor in international relations at the American University in Rome.

"These so-called 'reimbursements' don't reimburse real electoral expenses but are part of a massive public funding for political parties," he added.

Roberto Maroni, former interior minister and one of three people now leading the party, said Tuesday Bossi did not deserve what had happened and stressed that the Northern League was not dead and would rebuild itself.

Flavio Tosi, the Mayor of Verona and party loyalist, said Bossi had acted appropriately.

"Bossi's resignation was an example to all secretaries that have not resigned for far more serious things," said Tosi.

"With the resignation of Renzo Bossi and others as well, the League is demonstrating how it is cleaning itself up," he stated.

Pressure is now mounting on another trusted Bossi ally Rosi Mauro to resign. However, the vice-president of the senate and member of his so-called magic circle has so far resisted from doing so.

"I don't see why I should resign, I never took a single euro," Mauro said on Tuesday.

Meanwhile, prosecutors in the northern city of Genoa have launched an investigation into alleged fraud by the League, which has also been facing probes in Milan, Naples and Reggio Calabria.

Genoa investigators are looking into deposits of up to 40,000 euros that Belsito allegedly made into the account of the League's regional secretary for Liguria, Francesco Bruzzone.

Now party leaders are now seeking to fill the gaping void left by Bossi who abruptly ended his political career last week.

He often called for Italy's northern regions to separate from the rest of the country and claimed the national government was taking too much of their wealth.

"Roma Ladrona" or "Big Rome thieves" was a common battlecry from the gruff leader who survived a serious stroke in 2004.

"Bossi will be remembered as a charismatic leader who expressed the dissatisfaction of northern Italy and the wealthy who did not trust their political elites any longer," said Professor Giovanni Orsina, deputy director of the School of Government at Luiss University in Rome.

"But he was a victim of the same defects for which he criticized others. This is going to be very damaging for the Northern League," Orsina added.

Orsina, a professor in European political history, said the party with most to gain may be Berlusconi's People of Freedom Party which could seize the opportunity to pick up votes ahead of next year's elections.

"This is a godsend," said Orsina. "The era of Bossi and Berlusconi is over."

The League, now part of the opposition to Prime Mario Monti's technocrat government, was an important member of Berlusconi's centre-right coalitions. Bossi brought Berlusconi's government down at the end of 1994 before rejoining their alliance.